Regulating Lithium Battery shipments as cargo and associated costs

An article in the Wall Street Journal (Jan 31, 2012) describes a change in regulations by the FAA that barred transport of lithium batteries by air, without appropriate packaging, following a fire and associated crash of a UPS plane carrying such cargo in Dubai.  The reason is that Lithium battery fires spread quickly and can thus be destructive. This rule meant higher costs and possible supply disrutpions to manufacturers to comply with regulations and documentation.  But, thanks to industry pressure, a recent Congressional rule change recommends that regulators must produce reports that show that lithium batteries had a substantial role in the fires before such regulations remain.  How should industry competitiveness and associated costs be balanced with transportation risks in developing regulations ? Given that better packaging reduces transport risks, should customers be educated about these costs, and the need to absorb them, or should taxes collected by states to cover these costs ?

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , . Bookmark the permalink.

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